Qantas & Virgin Australia To Be Watched For High Prices

Following Australian carrier Rex entering voluntary administration, other fellow airlines of Qantas (Jetstar included) and Virgin Australia have been put on a watch.

The ACCC, the watchdog for Australian consumers who are concerned about higher airfares, has placed these companies on notice.

By Rex entering voluntary administration, their capital city services with jet-powered aircraft collapsed, giving market share back to the more established airlines.

The ramifications of the Rex administration are prospective higher airfares for Australians and other travellers between major capital cities. This prospective increase will be on top of already expensive flights, similar to Canada.

The ACCC reported that, across the first four months of the year, airfares stabilised and became more competitive due to increased competition across several route segments.

However, now that Rex no longer flies between markets such as Melbourne, Sydney, Brisbane, and more, there are visible concerns that existing carriers such as Qantas and Virgin Australia will increase their prices.

A competitive domestic market is important for the Australian industry; however, that has lacked in recent times, with many pointing to the strong position Qantas Group has in the market as being hard to break through.

In a press release, the Commissioner of ACCC stated that while Rex didn’t have the largest percentage of market share, their presence was enough to drive competition, and without them, typically, airfares would then look to rise.

Rex’s ending of jet-powered flying comes moments after the collapse of Bonza, another low-cost Australian carrier that sought to operate across unserved or underserved markets.

While Bonza wasn’t aiming to fly across markets like Qantas’, it still aimed to disrupt the market. Rex was hoping to do something similar, but both ultimately failed for different reasons.

One of the most noteworthy changes for routes that Rex previously flew on is now the smaller amount of airlines serving each market. The reduction is what many are concerned with lead to increased airfares.